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Friday, August 5, 2016

Warren Buffett: a monkey is a better investor than Trump

A dart-throwing monkey is a better investor than Donald Trump.

Is Warren Buffett correct in stating that a monkey is a better investor than Trump?
Buffett puts money on monkey to outperform Trump as an investor
“A monkey throwing darts to pick stocks would have made a 150% profit during the decade-long run when Donald Trump’s namesake company, Trump Entertainment Resorts, lost 90 cents on the dollar, the billionaire Warren Buffett stated”

Buffett: “That was the only time Donald Trump went to the American people and said, ‘I’m a winner, invest in my company.’ … Over the next 10 years, the company loses money every year, every single year. He takes $44 million in compensation. If a monkey had thrown a dart at the stock page it would have made 150%. People who believe in [Trump] came away losing well over 90 cents on the dollar. They got back less than a dime.” Considering that Trump’s public company was formed in 1995, when the stock market was still on a tear, this seems to be a fair assessment. Even with the “dot com crash,” a random selection of stocks would have been a better investment. Buffett is perhaps too charitable. From 1995 to year’s end 2004, the S&P 500 did gain a 157% return. But if our brave monkey turned on dividend reinvestments and sported a return close to the S&P 500, then there would have been a 203% return (calculator). (Here’s another source on Trump’s company: As its stock collapsed, Trump’s firm gave him huge bonuses and paid for his jet.)